Teeing-off Lanka’s tea industry

Speech by Plantation Industries Minister Mahinda Samarasinghe at the 116th Annual General Meeting of the Colombo Tea Traders’ Association in Colombo last Friday

We are living in an era in which Sri Lanka is getting transformed from a low income country in conflict to a middle and high income country in peace time. During the conflict period, the tea industry suffered severely due to the loss of the country’s image internationally, a situation which had a negative impact on export earning. Today in peacetime, we are in an excellent position to re-capture the traditional position as a vibrant democracy and a peace loving country.

Despite the bleak outlook last year, it is an achievement that Sri Lanka was able to record the highest ever tea prices in its history. However, we should not be complacent as we have many more challenges confronting us.

Challenges ahead

The major challenge confronting our tea industry today is to retain its preferred production targets and maintain the quality which is synonymous with “Ceylon Tea”. With regard to production targets, its share in the world market, percentagewise it has declined over the last half a century to almost half of its original share.

This has been due to aggressive competition from other tea producing countries and the very low rate of replanting and equally low productivity and the high production cost and the absence of an aggressive marketing cum promotional strategy of Ceylon Tea.

The proactive approach we expect from our embassies and High Commissions to support the trade was lacking.

My immediate attention as the Plantation Industries Minister will be given to addressing these major issues. In the next few years, we will give priority to a vigorous program of replanting, infilling, factory modernization and post-harvest quality improvements.

Large extents of ageing tea bushes will be replaced with high yielding tea varieties recommended by the Sri Lanka Tea Research Institute.

I am interested in reinforcing Ceylon Tea to be synonymous with excellent quality tea. I have discussed with the Tea Board the importance of embarking on a dynamic promotion and marketing strategy to rebuild the image of our tea in the world as even our traditional buyers may have now forgotten the taste of Ceylon Tea due to the lack of focus on this important aspect. Along with this we can talk about “best practices” we have adopted in the industry and the health properties of tea while ensuring food safety standards to meet consumer demand.

Quality dropped

Industry must be also cognisant of their corporate responsibility to the Millennium Development Goals and global environmental concerns in production and manufacturing practices, so that even niche markets can be captured.

It is of serious concern that our teas have lost out internationally due to not meeting the expected quality requirement despite efforts of the Sri Lanka Tea Board to ensure export tea quality. This situation must be rectified without delay.

We should not allow our competitors to overtake us in this race by offering substandard teas. The Sri Lanka Tea Board and CTTA must work together to ensure the good name of our teas. We have taken several steps to strengthen the Sri Lanka Tea Board’s capacity especially its laboratories, as well as the Tea Research Institute to do its job better.

I am looking at various legislative enactments concerning tea so that the laws can be brought in line with the new objectives. A Committee has already been appointed and I have asked them to consult the trade so that a practical approach can be embarked on.

Exporting value added tea

We also have to look at the tariff and non tariff barriers in place in a number of buyer countries and negotiate a way out. I will use whatever international clout I have built over the years to see how best we can achieve our desired results. All this could have been avoided had we paid due attention to the growing trends in our most lucrative markets.

Another area for serious concern with regard to our tea trade is its dependence on bulk teas. The time has come for us to increase the export of teas in value added form. This area is critical to us as a nation. By emphasising on bulk teas, we not only lose revenue, but also allow room for others to blend our teas, superior in all aspects, with inferior origins and sell them as their own blends to compete with our products. This situation must be addressed. Our policy is to ensure that a major quantity of our teas find markets in value added form. We can certainly look at what kind of incentives should be provided to the industry for this purpose.

To achieve this, only the commitment from all of us but also financial resources is needed. I have commenced a negotiation process with the Treasury to explore ways and means of generating extra revenue to plough back to the industry in a focused manner, whether we talk about replanting infilling, factory modernization, post-harvest quality improvements or better R&D which would then contribute towards increasing yields, productivity, quality improvements and a decrease in cost of production. I met all of our stake holders to discuss this issue and will continue to keep this dialog going so that the necessary synergies can be established in order that we all pull in one direction in the best interest of the industry.

We should also be mindful of the significant contribution made by the smallholder sector to national production and their future role in sustaining the industry and our social responsibility to ensure their livelihood improvement. In the tea sector we use one of the most important national resources, ‘the land’ which belongs to the people.

The tea sector being a vital commercial sector, the country has a right to expect a substantial contribution from this sector to government revenue to augment urgent development needs of the country, especially when we as a nation are having insurmountable challenges in the immediate aftermath of a post conflict situation.